Global trade predicted to rebound, with emerging markets driving growth

***Canadian companies look to rapidly expanding emerging markets

***India forecast to become fastest growing trade market

VANCOUVER, Nov. 14, 2012 /CNW/ - After a challenging 2012, the HSBC Trade Forecast is outlining a dual speed trade rebound as South-South corridors become more established, driving growth to 2015 before being rejoined by the developed world in the later part of the decade.  The report shows that internationalization will then intensify as we enter the next decade (2021-30), as businesses optimize their global supply chains to compete around the world.

By 2020, HSBC expects forward-thinking companies worldwide to have exploited multiple trade corridors and partnerships, created effective networked supply chains, and tightened efficiency and operations as a result. This trend continues through 2021-30, contributing to a stabilizing of trade growth which also reflects the growing maturity of emerging markets.

'Dual-speed' growth

According to the Trade Forecast, powerhouses India and China will be joined by emerging trading nations including Vietnam, Indonesia, Egypt, Turkey, Mexico and Poland to record significant trade growth in the next three years.  As these economies industrialize, there is an increase in trade of higher value goods, reflecting the increased maturity of these faster-growing economies with large populations and rapidly growing middle-class consumer markets.

Linda Seymour, Executive Vice President and Head of Commercial Banking, HSBC Bank Canada said: "As Canada is a major exporter of commodities and natural resources, the rapid industrialization of many Asian economies and demand for raw materials presents opportunities for Canadian companies doing business internationally. It is important that Canadian companies take advantage of these opportunities as trade activity between Canada and the United States slows due to softening US demand and the strong Canadian dollar."

India trade growth a driving force to 2030

The Trade Forecast highlights India's critical role in world trade growth over the entire period.  India represents the fastest growing import or export partner (or both) between 2013-15 or 2016-2020 for the 23 markets studied in the trade forecast, including Canada. India's trade growth can be linked to its growing consumer wealth and emerging middle class; investment in its infrastructure development; the impact of Foreign Direct Investment (FDI); its diverse range of exports and a move to produce goods higher up the value chain, and its developing role as a supply chain hub for Asia.

Echoing the trade forecast, the latest HSBC Trade Confidence Index (TCI) of exporters reveals greater confidence among emerging nations, led by India. Businesses in these markets are exploring new trade corridors, finding new trade partners and new trade networks from which to grow. Businesses in developed countries are - unsurprisingly - less confident about trade prospects.

The TCI also shows that close to nine in ten businesses in Canada (88%) expect trade volumes to remain steady or increase, while just under half (49%) will expect business to grow over the next six months. Eurozone troubles have not had a significant impact on Canada's trade with Europe, as all European countries have seen an increase in trade flows from Canada over the past six months.

Key countries and corridors

In addition, the report highlights that:

• India is the fastest-growing source for Canada's importers (82%) and is expected to be so until 2020, followed by Malaysia (80%), Vietnam (69%), Mexico (64%) and Turkey (51%).
• Poland and Saudi Arabia tied as the fastest-growing destinations for Canadian exports (81%), followed by UAE (42%), China (22%) and Australia (19%).
• Malaysia is forecast to see strong growth in trade to Latin America in the years to 2020, at approximately 9% in the period 2016-20, underpinned by a greater sophistication in the products imported by the continent, particularly in electronic goods. Exports to Brazil are predicted to grow 14% annualized over the same period.
• Turkey and Egypt are expected to demonstrate dynamic export performance to 2020. Benefitting from a rapidly expanding export base, lower energy costs (short term) and an important 'trade hub' position, both will see export trade growth of over 12% 2013-15. Turkey's trade growth will continue 2016-20 as prospects improve in Europe, and remain at a steady 9% a year between 2021 and 2030.
• Vietnam is expected to record double digit annualized trade growth throughout the forecast period 2012-30

Notes to Editors:

HSBC Trade Forecast - Modeled by Oxford Economics

Oxford Economics has tailored a unique service for HSBC which forecasts bilateral trade for total exports/imports of goods, based on HSBC's own analysis and forecasts of the world economy to generate a full bilateral set of trade flows for total imports and exports of goods, and balances between 180 pairs of countries.

Oxford Economics produces a global report for HSBC, plus regional reports and country specific reports on the following 23 countries: Hong Kong, China, Australia, Indonesia, Malaysia, India, Singapore, Vietnam, Bangladesh, Canada, USA, Brazil, Mexico, Argentina, UK, France, Turkey, Germany, Poland, Ireland, UAE, Saudi Arabia, and Egypt.

Oxford Economics employs a global modeling framework that ensures full consistency between all economies, in part driven by trade linkages. The forecasts take into account factors such as the rate of demand growth in the destination market and the exporter's competitiveness. Exports, imports and trade balances are identified, with both historical estimates and forecasts for the periods 2013-15, 2016-20 and 2021-30.

Oxford Economics - formerly Oxford Economic Forecasting - was founded in 1981 to provide independent forecasting and analysis tailored to the needs of economists and planners in government and business.  It is now one of the world's leading providers of economic analysis, advice and models, with over 500 clients. Oxford Economics commands a high degree of professional and technical expertise, both in its own staff of over 70 professionals based in Oxford, London, Belfast, Paris, the UAE, Singapore, Philadelphia and New York, and through its close links with Oxford University and a range of partner institutions in Europe and the US.

Trade Confidence Index

The HSBC Trade Confidence Index covers a total of 20 markets and is the largest trade confidence survey globally. The current survey comprises six-month views of 5,800 exporters, importers and traders from small and mid-market enterprises on: trade volume; buyer and supplier risks; the need for trade finance; access to trade finance; and the impact of foreign exchange on their businesses.

HSBC

HSBC Bank Canada, a subsidiary of HSBC Holdings plc, is the leading international bank in Canada. HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 6,900 offices in over 80 countries and territories in Europe, the Asia-Pacific region, North and Latin America, and the Middle East and North Africa. With assets of US$2,721bn at 30 September 2012, the HSBC Group is one of the world's largest banking and financial services organizations.  

SOURCE: HSBC Bank Canada

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